Smart grid market outperforms in 2012 (but the future looks less bright)
By Allan McHale
World smart grid sales at an installed value climbed to $36.5 billion in 2012 -- a growth of 30% on 2011 -- while M&A activity reached $19.5 billion, almost doubling the value of deals in the previous year. That's according to Memoori’s latest report, The Smart Grid Business 2012 to 2017.
This confirms that progress has been made over the last few years to move the smart grid out of the embryonic stage into its infancy - a commendable performance given that the world economy has struggled during this time and very few businesses have done more than mark time.
But we forecast that growth will slow down to a more modest 20% over the next three years as the smart meter market, the main engine for growth the last three years, falls off. With an investment of $15 billion in 2012, AMI is currently the largest single segment spend in the smart grid sector. It accounts for some 40% of the investment dollars, yet only accounts for 9% of the technical market potential for delivering a full, working smart grid.
The reason for that is easy to understand: The installation of AMI carries little technical risk and a return on the investment should start immediately as a result of saving operating costs through automatic reading and billing. So it's not surprising that so many utilities have taken the low hanging fruit first.